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A supplier to Ford Motor Co. of Canada will close two plants in Oakville at year-end with a loss of 525 jobs.

Automodular Corp. said the closings come after Ford decided to move the work it was doing under contract in-house as part of its new Edge program.

Ford announced Wednesday it was hiring more than 1,000 people for its Oakville assembly plant in preparation for the launch of its 2015 Ford Edge crossover utility vehicle.

Ford acknowledges some of those 1,000 jobs are due to “insourcing” but has declined to say how many.

“The new jobs at Oakville Assembly will span across the plant, including supporting production line operations and new areas such as sequencing. The overall project goes well beyond insourcing,” Ford spokesperson Michelle Lee-Gracey wrote in an email response to a request for more information.

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“We can tell you that we have invited Automodular employees to apply for these Ford jobs,” the email also said.

The move has created an internal rift at Canada’s largest private sector union, Unifor, formerly the Canadian Auto Workers, which represents workers at both plants.

For Automodular employees, the move means most will lose good industrial wage jobs paying $22 an hour, local president Angus MacDonald said in an interview.

“We, as a union, have done a poor job,” said MacDonald, who heads Unifor Local 1256, representing 460 workers at Automodular.

MacDonald said he could see the writing on the wall after Unifor agreed to lower rates for new hires in contract talks with the Detroit Three automakers two years ago.

The new jobs at Ford will start at $20 an hour, he said, while Automodular workers make $22 an hour.

Ford announced a $700-million investment to its Oakville plant in September 2013. (Rene Johnston/Toronto Star file photo)

“This is a job they’ve been doing very well for years. Suddenly they don’t have a job. They don’t have an income. Socially, this is terrible,” he said.

Unifor national president Jerry Dias disputed MacDonald’s claim that Ford’s labour costs are lower, saying the “all-in” labour costs including benefits are higher at Ford. Plus Ford workers can earn up to $34 a year after 10 years, while Automodular’s top rate is $22 an hour, Dias noted.

“The bottom line is, if I’m an Automodular employee, am I upset? Yes. We got as many jobs as we could. Is there enough for our liking? No,” Dias said.

However, about half the Automodular applicants failed, MacDonald said, noting the six-hour process required workers to do long division without a calculator and other math skills as well as pass medical and fitness tests.

Automodular’s fate was sealed shortly after Ford announced in September 2013 that it had won a hard-fought internal company competition to be designated the “global platform” for the next generation Ford Edge.

Ford said it would invest $700 million to retool the plant, with the help of the federal and Ontario governments, which contributed a combined $142 million.

Oakville would be the only Ford plant making the new Edge and exporting it to nearly 100 countries.

The announcement was seen as a major victory for Ontario’s beleaguered manufacturing sector, which has lost hundreds of thousands of jobs to technological change, globalization and also the Great Recession of 2008-09.

A month later, Automodular announced Ford had agreed to extend its contract for one year to Dec. 23, 2014, after which both of its plants would close.

“The reason they gave us for taking back the work is it’s strategic,” said Chris Nutt, president and chief executive officer of the 25-year-old Ajax-based company.

Automodular makes major components for Ford, including instrument panels, power packs and suspension modules, he noted.

Ford had won some concessions from its workers and had unused space in its plants, Nutt said, “so it may have shifted the economics for them.”

So far, about 70 Automodular employees have landed jobs at the Ford plant, Nutt said. “It would make sense for Ford to hire them instead of new people off the street. They already know the work. It’s a fairly steep learning curve.”

Ford said at the time it won the new global mandate that its new labour agreement was a contributing factor.

The Canadian union said it was under pressure to compete for jobs after its U.S. counterpart agreed to a two-tier wage scale that created an even lower wage scale for new hires south of the border.

But the new deal reversed a decades-long practice among automakers of contracting out work to lower-cost suppliers. Automodular had ridden the wave for 25 years, initially as a supplier to General Motors and later to Ford.

GM terminated its last contract with Automodular in 2010 after emerging from bankruptcy protection as a far smaller company with fewer Canadian plants.

For Automodular, which at one time served automakers from Michigan, Ohio and Delaware, the Ford contract and the Oakville plants were its last.

The company is hoping to diversify into the clean energy sector, Nutt said. However, any move into a new area would not save the jobs at the Oakville plants, he said.

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